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Query: How the eligibility for home loan is calculated

Category: Finance

Answer: In case of Home Loan, eligibility is calculated on the basis of monthly cash flow generated by surplus income over expenses. Following is the example of general formula to calculate the eligibility for Home Loan: - A. Total Average Monthly Income for 2 Years =100000 B. Less:- Average monthly expenses based on last 1 year= 40000 C. Surplus available (A-B) =60000 D. 50% of monthly Surplus =30000 So the borrower can afford to pay an average EMI(Equated monthly instalment) of Rs. 30000 to repay the loan. Now bank again calculates based on no of years & prevailing interest rates that how much is the principal that can be equated with this EMI with 10 years,15 years or 20 years. Definitely for longer periods the eligibility amount will be higher than shorter periods. Also, age factor is also important while choosing the tenure for housing loan, as bank considers earning periods till certain age only.

Date Posted 26-Jan-2020
Posted By Kumar Prakash
Views: 831

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